Catella has launched Property Income 2017, the first alternative investment fund for real estate that will be listed on the Nasdaq Stockholm stock exchange.
Property Income 2017 will have a maximum size of SEK 1,200 mln (€125 mln) and will seek to invest in properties with stable cash flows and high dividend capacity, according to Catella's Property Investment Management unit. A minimum of 80% of the fund will be invested in Sweden.
The fund’s AIF manager is Plain Capital Asset Management Sverige, and the fund's depositary is SEB. The subscription period runs until 16 May, with the listing on Nasdaq Stockholm scheduled for the end of May.
'Real estate values vary over time, while the cash flows of leased properties are stable,' said Timo Nurminen, head of property investment management at Catella. 'The fund’s strategy is therefore to own property over an extended period, to maintain rigorous cost control and to regularly distribute a large proportion of its income. This means that stable cash flow will be the dominant part of the total returns, thus creating security.'
The first investment that will be evaluated by the fund is a portfolio of defensive retail property, tenanted primarily by food stores such as ICA, Coop and Hemköp, and by Systembolaget liquor stores.
'This type of real estate has strong cash flows and thus stable and good dividend capacity for its owners. It is also a segment that has seen institutional focus in recent years, and the fund is now also giving smaller institutions and other investors an opportunity for exposure to defensive retail property,' said Martin Malhotra, project manager at Catella's Corporate Finance unit.
Property Income 2017 has a planned life term of 10 years. The fund aims to pay dividends from July 2018 corresponding to 6–8% per year, with an annual total return target of 9–11%.
